Thinking of buying an investment property in Norfolk, Virginia?
Owning an investment property in Norfolk can be lucrative. It can be a great way to earn passive income and generate wealth. But that to happen, needless to say, you must make a sound investment.
Norfolk is one of the best areas for real estate investing in Virginia for various reasons. Among other things, the location is desirable, the population is diverse, and the economy is doing great thanks to thriving industries.
Also, according to latest stats, demand for rentals seems to be on upward trajectory – just like it has been the last couple of years. So, what does this all mean to a budding real estate investor? It simply means that investing in the Norfolk rental market carries huge potential for high ROI.
Be as it may, investing in Norfolk real estate isn’t a guarantee to quick riches. To be successful, you’ll need to make the right moves. That’s why hiring professionals is so important, especially if you’re just starting out.
The world of real estate can be murky waters without the right agent on your side. It, therefore, goes without saying that hiring a pro can help you avoid mistakes and help you make the most out of your investment.
In this article, we here at Rent Easy will go into the basics of buying an investment property in Norfolk. Follow our recommendations to maximize the return on your potential property purchase. For any additional questions, consider contacting us today!
What is the Norfolk Real Estate Market Like?
Numbers don’t lie – Norfolk has a large population of renters. And this basically means that landlords are almost always guaranteed of a steady business for their rental properties.
It’s also worthwhile noting that the rental demand is diverse. It originates from a variety of sources, such as tourists, students and from military personnel.
What’s more, the opportunities are almost infinite. Whatever real estate investment type you’re looking for, Norfolk has you covered. From single-family homes to multi-family properties to short-term vacation rentals, you’re spoilt for choice.
Top Tips for Real Estate Investments in Norfolk
1. Secure a downpayment.
You obviously need to make a downpayment when it comes to buying real estate. However, the amount of downpayment to make differs depending on the type of real estate you’re buying.
Unlike owner-occupied homes, investment properties require a sizeable downpayment. The approval requirements also tend to be a tad bit restrictive.
Whereas it’s quite normal to put down a downpayment of 3.5 percent for owner-occupied homes, you’ll need to make as much as 20 percent for investment properties.
2. Choose the right location.
Location, location, location – it’s every real estate agent’s mantra. And for good reason – the location of your investment property can make all the difference.
Even within Norfolk, no two locations are created the same. There are some that carry more potential than others. That’s why due diligence is key when it comes to successful real estate investing.
The right real estate location is one that possesses desirable characteristics such as:
- Low crime rate
- A growing job market
- Access to public transportation
- Plenty of desirable amenities
3. Calculate your expected revenue.
Avoid making a blind investment move. Basically, know what you’re getting yourself into. Most real estate experts agree that an annual rate of return of 10 percent is great. This means that for an investment worth $300,000, it should be able to generate at least $30,000 in annual gross income.
To calculate your net profits, consider the operational expenses. Examples of such expenses include:
- Property taxes
- Insurance fees
- Maintenance and repairs
- Accounting and legal
- Trash collection
Broadly speaking, such expenses add up to 1 percent of the value of an investment property. The difference between your income and your expenses is your net income.
4. Make sound investment decisions.
Buying an investment property is not only a huge financial move, but it’s also without a doubt an emotional decision. But the thing is: you risk falling prey to a number of property buyer mistakes if you allow emotions to get the best of you.
Your aim should be to buy a property that makes business sense. In other words, your decision to buy an investment should be based on location, price, rate of return, resale value and other vital factors.
5. Familiarize yourself with Virginia rental laws.
Renting out a home comes with a bevy of responsibilities, many of which need to be performed to ensure you are complying with Virginia's landlord-tenant laws. Among other things, you’ll need to ensure:
- Your home is habitable. Your investment property must abide to Virginia health, safety and building codes.
- Your tenant lives in privacy. Tenants in Virginia have a right to the quiet and peaceful enjoyment of their rented premises.
- You treat all tenants respectfully, equally and fairly in accordance with the Fair Housing laws.
- You respond to all tenant maintenance requests on time.
But these are only a few of the rights and responsibilities that renting out your home requires you to be knowledgable of!
If you’re just getting started and have no prior experience of managing a property, hiring a professional is recommended. Remember, ignorance of the laws is never a defense in court.
6. Screen prospective tenants.
The last thing you want is to rent to a difficult tenant. Difficult tenants can mean late rent payments, excessive property damage, as well as other undesirable things.
A good screening process can help you avoid renting to such tenants. Ideally, screen tenants on the basis of their:
- Income level
- Rental history
- Criminal history
- Employment background
7. Hire an experienced property management company.
Being a landlord is highly involved. Between finding and screening tenants to collecting rent and maintaining the rental premises, landlording can be daunting.
Luckily for you, you may be able to hire a property management company to take care of all your property management aspects. Just ensure you hire the right company for the job, as no two companies are ever created the same.
The Bottom Line
Norfolk is a great real estate investment decision. Buying a property there means potential for high return on investment. But before jumping into the fray, it may be best to familiarize yourself with common real estate terms and consult a professional property management company like RentEasy.